A car has the following information :

CAPM Beta= 0.8

CAPM Return on car = 1.3% per month

Monthly storage = 10

Spot price = 1000

Market rate of return = 1.5% per month

Risk free return = 0.5% per month

You can rent the car to earn 5, both storage and rent are paid at the end of the month. There is no depreciation

What will the price of the car sell for in 3 months excluding storage costs?

Suppose that you need a car in 3 months and you believe price of car will be 1050. Which would be cheaper, buying the car today or buying in 3 months?

Answer rating: 100% (QA)

To calculate the price of the car after 3 months excluding storage costs we can use the CAPM Capital ... View the full answer